Gold, Silver See Gains, Await Fed Decision

(Kitco News) - Gold and silver prices are higher in midday U.S. trading Tuesday. The bulls are still enjoying the solid technical advantage, which suggests price action will remain sideways to higher in the near term. The precious metals bulls are also expecting more good news to come their way from the Federal Reserve on Wednesday. August gold futures were last up $8.40 an ounce at 1,428.80. September Comex silver prices were last up $0.125 at $16.565 an ounce.

The main economic event of the week began on Tuesday morning when the Federal Reserve’s Open Market Committee (FOMC) gathered to determine monetary policy. The Fed is expected to lower interest rates at the conclusion of the meeting Wednesday afternoon. The precious metals bulls will be sorely disappointed if the Fed does not make a U.S. rate cut. Most market watchers think a 0.25% interest rate reduction is in the cards, but the metals would likely get a bigger boost if the Fed did a less-likely 0.5% rate cut.

Then on Friday the U.S. employment situation report for July is out. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.

The World Gold Council reported emerging central banks are purchasing gold at a faster pace this summer. Lower government bond yields are attracting more buying interest in the yellow metal.

Also in focus this week is U.S.-China trade talks that have resumed at a high level. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are in Shanghai for discussions that began today. Expectations are low key for any significant breakthroughs.

The key “outside markets” today see Nymex crude oil prices higher and trading around $57.25 a barrel. The U.S. dollar index is slightly up and today hit another new high for the year.

Technically, August gold futures prices closed near the session high. The bulls have the firm overall near-term technical advantage and are keeping in place a two-month-old uptrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the July high of $1,454.40. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the July low of $1,384.70. First resistance is seen at last week’s high of $1,434.10 and then at $1,442.00. First support is seen at $1,420.00 and then at last week’s low of $1,414.60. Wyckoff's Market Rating: 7.5

September silver prices closed near the session high today. The silver bulls have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $17.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.835. First resistance is seen at last week’s high of $16.685 and then at $16.75. Next support is seen at today’s low of $16.425 and then at $16.345. Wyckoff's Market Rating: 7.5.

September N.Y. copper closed down 355 points at 268.20 cents today. Prices closed near the session low today. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the July high of 280.30 cents. The next downside price objective for the bears is closing prices below solid technical support at the June low of 259.95 cents. First resistance is seen at 270.00 cents and then at today’s high of 272.65 cents. First support is seen at 267.50 cents and then at 265.00 cents. Wyckoff's Market Rating: 3.0.